NZD: NZDUSD - Fails Above 0.6000 Again
The NZD had a range overnight of 0.5935 - 0.6013, Asia is opening around 0.5940. US Stocks ended in the green after a very whippy session and the USD has finally seen some buyers return after the FOMC.
- MNI on Labour data - While the unemployment rate was stable at 5.1%, better than the consensus, it appears that the rise in labour supply that was expected didn’t materialise. Thus, the data is close enough to what the RBNZ expected in February, and another 25bp rate cut on May 28 remains likely.
- Bloomberg - “Labor market data for the first quarter confirmed that domestic economic activity remains subdued, Governor Christian Hawkesby told a parliament select committee Thursday in Wellington.”
- “He said there were a lot of “soft” numbers underneath the headline”
- “Greater uncertainty from trade war is hurting confidence and making businesses less likely to invest “We think that’s probably the most immediate channel and possibly one that’s contributing towards a more subdued domestic economic environment, in conjunction with the hangover from high interest rates”
- The NZD could not hold above 0.6000 once again which suggests a potential retracement, which could offer better levels to buy.
- The price action continues to suggest that dips will probably still find demand, first support on the day is 0.5900 then 0.5800/50.
- CFTC data show Asset managers reduced their NZD shorts once more while Leveraged funds actually added a little to their current short.
- Data/Event : NZ Bond Sale
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg
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AUD: AUD/USD: Trades Heavy ?
The AUD stands out this morning trading near its lows when we have seen US stocks finally find some buyers and have a decent bounce off their lows. US yields though have exploded higher from a low of around 3.87% to a high of around 4.22%. This is not what Scott Bessent was planning and would be throwing a real spanner in the works as well as keeping the USD bid across the board.
- Yesterday's range was 0.5933 - 0.6127, we opened in Asia around 0.5990.
- The Aud will continue to be used by the market as a proxy for risk and for this reason expect bounces to continue to find supply while volatility remains so high.
- The AUD initially found some support yesterday as Chinese policy makers discussed ways to combat the tariffs and considered moving forward some measures that had been discussed. This increases the potential of China fast tracking both monetary and fiscal stimulus.
- On the day expect sellers once more to engage on any bounce back towards 0.6100/50, as the market watches with interest to see how the AUD trades sub 0.6000 and if this has potential to be sustained.
- Data today : Westpac Consumer Conf - 10:30 AEST, NAB Business Conditions - 11:30
AUDUSD
Source: MNI - Market News/Bloomberg
AUSSIE 10-YEAR TECHS: (M5) Bounce Fades
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.960 - High Apr 7
- PRICE: 95.705 @ 16:37 GMT Apr 07
- SUP 1: 95.420/95.300 - Low Feb 13 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.640 - 1.0% 10-dma envelope
Aussie 10-yr futures extended a recent strong bounce through to the Friday close, putting prices through the top end of the recent range. The confirmed breach of 95.851, the Dec 11 high on the continuation contract, reinstates a bull cycle and focuses attention on resistance at 96.207, a Fibonacci retracement point. A stronger bearish theme would expose 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
NZD: The Flightless Bird?
A day of extreme volatility with liquidity seeming to dry up. Once the dust settles though the NZD is still hovering just above its pivotal 0.5500 Support and continues to trade heavy.
- Yesterday's range was 0.5507 - 0.5626, Asia opened near the lows around 0.5540.
- The RBNZ is expected to lower its key rate to 3.5% tomorrow. The market is starting to think they might need to do more as trade tensions threaten the economy.
- NZ announced it would be lifting defense spending to 2% of GDP over 8 years.
- The NZD initially found some support yesterday as Chinese policy makers discussed ways to combat the tariffs and considered moving forward some measures that had been discussed. This increases the potential of China fast tracking both monetary and fiscal stimulus.
- Technically the NZD continues to hold the 0.5500 support area, but price continues to trade heavy just above it..
- The CFTC data shows both leverage funds and asset managers are running historically large short positions, if risk continues to melt down, expect these to be added to.
- On the day expect sellers to participate in any bounce back towards 0.5650/0.5700. All eyes though will be watching the key 0.5500 area for signs it might give way..
- RBNZ rate decision on Wednesday.
NZDUSD
Source: MNI - Market News/Bloomberg
